Sir John Bond urged to step down after 'failure' of £45bn Glenstrata deal

Sir John Bond, chairman of Xstrata, is under pressure from his shareholders to
step down in the wake of the miner's faltering £45bn merger with commodity
giant Glencore, which is expected to be voted down this week.

With Glencore understood to question the logic of the Qataris' valuation and adamant it will walk away from a bad deal, a last-minute bump to save the merger looks unlikely.

Ahead of Friday's shareholder vote on the deal, unhappy Xstrata investors have questioned how the City grandee can stay in the role with the board-backed merger expected to fail.

Knight Vinke, the activist investor which holds around 0.5pc of Xstrata, on Friday issued a statement in which it said if the deal collapses it will agitate for a change in the board's make-up to make it more "independent and robust". The Sunday Telegraph understands the fund is scrutinising the roles of the chairman, Sir John, as well as David Rough, the senior independent non-executive, amid concerns as to how they have fulfilled their role of standing up to management to represent the interests of smaller shareholders.

Neil Dwane, chief investment officer for Europe at Allianz Global Investors, a minority shareholder in Xstrata, said the board does not appear to have fought sufficiently for a higher offer, even after a key investor, Qatar Holding, emerged demanding a better deal.

"The chairman and CEO have frequently in meetings argued for the deal despite shareholder disappointment," he said. "So one might conclude that the company will need a new chairman to start with and maybe other new non-execs."

Xstrata is thought to contest criticism of its board, believing that if Glencore let the deal collapse that would indicate board members did get the best offer possible for shareholders. The miner also structured the deal through a scheme of arrangement that needs 75pc of those entitled to vote to approve the deal.

Qatar Holding, the second biggest investor in Xstrata after Glencore, threw the FTSE 100 tie-up off course with its demands that the commodity trader raise its offer from the 2.8 of its shares for each Xstrata share.

With Glencore understood to question the logic of the Qataris' valuation and adamant it will walk away from a bad deal, a last-minute bump to save the merger looks unlikely. Despite this, the City has not yet written off the chance of the merger happening.

Shares in Xstrata and Glencore both rose on Friday, almost 6pc and 8pc respectively, which broker sources said was driven by merger arbitrage funds – hedge funds that make money by betting on M&A – going long on Xstrata and shorting Glencore.

Their buying was said to represent a bet that Glencore will bump its offer in the next few days. The short interest in Glencore was mitigated by buying by institutional investors as it is reweighted in share indices to reflect its increased free float.